When using the equity method to account for an investment,cash dividends received by the investor from the investee should be recorded:
A)As a reduction in the Investments account.
B)As an increase in the Investments account.
C)As dividend income.
D)As a contra item to stockholders' equity.

Question

Quizplus · Accepted Answer

Under the equity method, cash dividends received from the investee are recorded as a reduction in the investment account because they represent a return of investment, not income.

When Using the Equity Method to Account for an Investment,cash